Question

3. What relationship existed between subprime mortgages and foreclosures when home prices fell?

A.The value of homes remained higher than the mortgage, so foreclosures decreased B.Many people with subprime mortgages could not make their payments, so foreclosures increased
C.Banks offered more subprime mortgages to avoid further foreclosures.
D.The Federal Reserve lowered interest rates to avoid further foreclosures.

Answer 1

the relationship that existed between subprime mortgages and foreclosures when home prices fell is: B.Many people with subprime mortgages could not make their payments, so foreclosures increased

Subprime mortgages are typically given to the borrowers with low credit ratings. To compensate with the low credit ratings, the lenders usually impose pretty high-interest rates, which often cause the borrowers to unable to pay their loans.